LABOK^ WAGES, KWD THE TARIFF. REMARKS =00 [LO :0 ■s HON. ABRAM S. HEWITT, DELIVERED IN THE HOUSE OF EEPRESENTA'nVES, MARCH 30, 188 "Idleness, the ground and liegiuniug of all miscliiefo" SiaL Henry VII, chap. 19. WASHINGTON. 1882. SPEECH OF HON. ABEAM S. HEWITT. The Honae being; in Coramittoe of tlie Wliole House on the state of the Union, and having under consideration the bill (H. R. No. 2315) to provide for the appoint- ment al'a commission to investigate the question of the tariff and internal-revenue laws — Mr. HEWITT, of New York, said : Mr. Chairman : I send to the Clerk's desk to b© read a resolution wliicli, at tlie proper time after the disoussion is closed, I propose to offer. The Clerk read as follows : Resolmd, That the bill creating a tariff commission be recommitted, with in- structions to the Committee on ways and Means to report within thirty days, or an earlier date if it be practicable, a bill based upon the following instructions : First. That all raw materials, meaning thereby all materials which have not been subjected to any process of manufacture, and all waste products, meaning thereby aU waste materials which are fit only to be manufactured, and all chemi- cals which are not produced in this country, and alcohol for use in manufactures, shall be placed upon the free list. Second. That so far as possible specific duties shall be substituted for ad valorem duties, and that in determining such specific duties the average dutiable value of imports during the last throe years shall be taken as the standard of value, upon which no higher rate o^ dui,y shall be imposed than shall be necessary to compen- sate for the difference m the cost of the labor at home and abroad expended in. the production of such products, after making due allowance for the expenses of trans- portation, and that the rate of duty shall not in any case, except on luxuries, exceed 50 per cent, of such average dutiable value. Mr. HEWITT, of New York. Those gentlemen who have followed the distinguished Representative from Minnesota [Mr. Dunnell] in the remarks which he has just concluded, will find that in the resolution which has been read there is no issue to be made with him. But there is an issue which presents itself clearly and unmistakably with the doctrines which have been i)roclaimed on this floor by other gentlemen on his side of the House. I confess that when the distinguished gentleman from Iowa [Mr. I^ASSON] took the floor, I expected to have as little controversy with him as Mnd I have with the gentleman from Minnesota. I supposed that the gentleman from Iowa would plant himself upon the doctrine that American industry could not flourish without jfree raw materials. I supposed he would insist that protection, if ever granted, should be granted only to infant manufactures, and that in framing a tariff' there should always be kept in view the desirable end of being able to get access to foreign markets with our surplus manufactured products. I had reason for this expectation, for I remember that long before 3 4 I became n, inoiiil»o,r of I Lin ITonso, when I was deeply concerned in tariff legiHhiiioii, in IHliO IIk^ genilernjin irom Iovv;i delivered upon tliiH lioor ih Hpeocli wliich miglil, ahnoKt be ialcen UHlhe text for thoHO wbo ;m'(5 now in favor of reforming IJk; tariff and of gettin/:; to freer trade in i,he niarketB of tbe worJd. To my aHtonisLment 1 Ibnnd f bat lie liad abandoned tbe doctrines wbich he then proclaimed, tlmt b(i has planted himself on the ground of protection for tbe sake of pro- tection, and that he has enforced his position with facts, arguments, tlieories, and conclusions from which I am compelled absolutely to dissent. To these arguments and conclusions 1 ])ropose to address myself to-day. I propose to show that wages arc not and cannot be lixed and maintained by the tariff. I j)roi)Ose to show Mr. KASSON. Will the gentleman from New York before he i>asses on allow me to ask him if I understood him aright as saying I ever made a speech in 1866, or at any other time, advocating ii(-B trade'/ Mr. HEWITT, of New York.' I did not say tbe gentlcn.au bad made a speech advocating free trade. Mr. KASSON. Did not the gentleman say Mr. HEWITT, of New York. I will repeat what I said, and then the gentleman can correct me if he sees fit. I said that he, in 1866, proclaimed himself in favor of free raw material, and of protection only to infant industries, and for such a tariff as would enable us to get access to the foreign markets of the world in competition witb other manufacturing nations. Mr. KASSON. Then the gentleman will, with that modification, allow me to say Mr. HEWITT, of New York. No modification. I have repeated precisely what I said before. Mr. KASSON. Then I challenge the production of any remark T ever made that ignored the question of protection where it was needed by American industry. Mr. HEWITT, of New York. I do not know what the gentleman desires precisely. But I will ask the Clerk, as my own voice is uii- h^ippily in a very precarious condition, to read the passage I have marked from the remarks of the gentleman from Iowa made in the House on the 9th of July, 1866. The Clerk read as follows : What you call protection amounts, therefore, simply to a system of equal rob- * bery ; taking from one borne Interest to pay to another. [Applause from the Democratic side.] When you have done this you say that you have framed an equal tariff law, and that its equal protoctionis di'fflised over ail the different interests. I say that this i s illogical ; it is absurd. You must change your theory of a tariff or else you must perpetually fail in your effort to gain a system that shall actually make the United States rich. If that is your object you must diminish the cost of the production of your manufactures ; and when you have done that you have taken a great step toward protecting both the manufacturers and the people of the United States. But if we go on in the present plan of adding to the cost of everything we produce, there is not another country on the face of the globe that wiU contribute one cent to enrich the people of the United States or be able to buy a single article of our production. Mr. HEWITT, of New York. That I think makes a sufQcient an- swer to the statement of the gentleman in regard to his position on protection. And I may add, further, that the very phrase " tiiat it was robbery'' was commented upon by General Garfield, who fol- lowed him in rei)ly. Mr. KASSON. If the gentleman will allow mo, without taking time to road tbe context, 1 will refBr him to page ilf)! 8 of the same 5 volume of debates, wliere I declared distinctly, in controversy with Mr. Thaddens Stevens, that there were fonr classes of opinions upon t he snhjcct of protection and tree trade. And I said : Between tliese two extremes — Prohibitory tariff and free trade — are two classes. One of them wishes simply to foster the incipient industries of America until tliey are able to take care of themselves without help in fair com- petition with (he industries of foreign countries. To that class of free-traders I oelong. Mr. HEWITT, of New York. And I stated that the gentleman was in 1866 in favor of protection of infant mannfactnres. But Hioso iufiints, after .sixteen years, are now so much more feeble than thoy were then that in his speech the other day he planted himself upon the doctrine of protection for the sake of protection. Mr. KASSON. You will find that I stated then that my position was *'to foster the incipient industries of America until they are :i-ble to take care of themselves without help in fair competition with The industries of foreign countries." Mr. HEWITT, of New York. Yes, sir. Mr. KASSON. Now, let me say further, in order to end this con- troversy, that 1 have never in any speech waived the right and duty 'J f protecting American industries sufficiently for their maintenance. And whatever language the gentleman may quote of mine at that period, such as the language lie has quoted now, was uttered in con- troversy about my position. I wish to furj also that further exami- nation and experience has convinced mo more and more of the mer- its of my principle of protecting American industries always as long as needed to enable them to maintain themselves against the indus- tries of foreign countries. And if 1 committed any folly several years ago I am not afraid to say now that itAvas a folly. But when the gentleman will fairly interpret the language he has quoted he will find it all standing upon that principle, it being a difference of opinion as to the extent to which iDrotection should go. JVIr. HEWITT, of New York. I do not wish to deprive the gen- tleman of any opportunity to put himself right ; but I am bound to say that if this comes out of my time I think it is rather unreasona- ble to ask it of me. Mr. KASSON. It will not come out of the gentleman's time. I would like to ask the gentleman if in his opinion this statement is wrong? An experience of more than ninety years has compelled me to helieve that the protection of American labor demaiids from the American people their most pro- foiiud consideration and their most decided action. The question now to be con- sidered is. whether we, as a nation, are willing to know the truth and let the truth make and maintain our freedom, or whether we have deliberately determined to follow the advice of men and nations that have a direct and immediate interest in misleading and deceiving us. I believe that to be so, and I am more than ever opposed to follow- ing the advice of the English nation, which my friend from New York is disposed to follow. What I have read is a statement by a jnan venerated throughout the country — not unknown to the gentle- man from New York — whose name is Peter Cooper. [ Great laughter. ] I hope the gentleman will indorse that statament. [Applause on the Kepublican side. ] Mr. HEWITT, of New York. I will reply to the gentleman in re- gard to Mr. Cooper as I did once on the occasion of a little dinner ; and what I said then has never appeared in the papers. T said that e usually wlion I was introdncod to a ftirangftr my ini rod uccr eommouly said, " This is the son-in-law of Peter Cooper." I said that the great- est ambition of my life had been, at some time or other, that Mr. Cooper might be introduced to some one with the statement, " This is the father-in-law of Abram S. Hewitt." [Great laughter.^ Mr. KASSOIST. I believe that Mr. Cooper does not concur with the gentlemau in that desire. [Renewed laughter.] Mr. HEWITT, of New York. I have not that access to Mr. Cooper's opinions which the gentleman from Iowa [Mr. Kasson] seems to have. But I suggest to him that the speech which he made in 1866 shall be reprinted entire as an appendix to my speech. I did not intend to quote from it. I intended simply at the outset to say that I dissent from the gentleman's present position, but that I stand upon the doc- trines of his speech of 1866. It might have been entirely unnecessary for me to do more than to republish that speech, in order to make the argument which I hope to make against this bill and in favor of an immediate revision of the tariff. With that I will ask the Clerk to read a passage which I have marked in the speech of the gentleman from Iowa at that time. It will be found on page 3718 of volume 59 of the Congressional Globe. It was made July 10, 1866. The Clerk read as follows : Mr. Kassox. If I understand tlie gentleman from Vermont [Mr, Woodbridge] correctly, in his opinion as well as mine the title of this bill should be changed so as to read, "A bill to prevent the diffnsed blessings of Divine Providence from being enioyed by the people of the United States." It is an attempt against the laws of f^roTsidence to force the people of this country to pay moie for what they need than the laws of Providence would otherwise require. " As I was going on to • say, this system of protecting one of the articles that you raise the cost of by this bill compels you to go immediately to another interestand raise the price of that. Take the article of wool, for instance; no sooner do you propose to increase the tariff on wool than you immediately go to the manufacturers ot wool and give them an increased protection on their manulactm-es. And tlius those who raise the wool pay back a large part of the bounty that is paid for the raising of wool to contribute to the bounty given to the manufacturer, and the non-producer of wool pays both bounties in buying his clothing. And so it is in relation to the article of iron, or upon any other particular branch upon which you increase your tariff, yon immediately go off in another direction and increase the tariff upon other col- lateral interests affected by it; and so you build up a gigantic system of bounties apon all these interests upon the plea of protecting them. The fundamental error ' *Ji this bill is this : you endeavor to make the people of this country grow rich off each other. [Applause on the Democratic side.] Mr. KASSON. Do I understand that the gentleman from New York accepts my principle of protection ? Mr. HEWITT, of New York. Do I accept your principle of pro- tection ? I do not understand your principle of protection. Mr. KASSON. Not as stated in what I read to the gentleman ? Mr. HEWITT, of New York. What you read ? I stand upon what the Clerk read and what you said. Mr. KASSON. Yon take it awav from all its context. Mr. HEWITT, of New York. Well, I think I have had read now about one-quarter of that speech. I am ready to sit down and allow the whole speech to be read to this House in lieu of what I have to say. Mr. KASSON. I do not think you could do better. [Laughter.] I think in a few years you will be quoting from the speech I made the day before yesterday. Mr. HEWITT, of New York. I think the gentleman from Iowa will not complain that I have not allowed him the largest liberty to make his case clear. But if he desires I will print his entire speech as an appendix to mine, so that the country may have the opportu- nity to see whether he was right then or whether he is right now. 7 Mr. KASSON. You had better print yours as au appendix to mine. Mr. HEWITT, of New York, The gentleman from Iowa seems to he rather unhappy. I am sorry to be the cause of giving him un- happiness. Mr. KASSON. Quite the contrary. Mr. HEWITT, of New York. I accept the plea of infancy which the gentleman has put in here. I have had occasion to plead the "baby act" myself in the course of my time, and I know how it is mysell'. Mr. KASSON. I am afraid you will have to do it again after this speech. Mr. HEWITT. Mr. Chairman, I am opposed to the hill creating a tarilf commission for the reason that it will make delay, and delay is dangerous in the present perilous condition of general husiness. We are now prosperous, but our prosperity will continue only so long as there is an adequate market for our products. At present we have a foreign market chiefly for raw materials — such as food products, cot- ton, petroleum, and tobacco. For our manufactured products the mar- kets of the world are practically closed against ns — closed because it is impossible to sell our goods in the open markets of the world in com- petition with other manufacturing nations. The reason of this is, mainly, that our tariff legislation has erected artificial barriers to the free introduction of raw materials, and by the imposition of unwise taxes we are handicapped at the very outset in the commercial race. These obstructions cannot he removed too soon. They are well known and can be enumerated without difficulty. We tax food, of which we are the great exporters ; Ave tax wool, which is the founda- tion of a vast industry ; we tax bituminous coal, iion-ore, and scraiJ- iron which lie at the base of the great iron and steel industry ; we tax copper ores, alcohol, and oils and numerous chemicals, without which many branches of industry cannot exist. Having thus created an artificial system we find it impossible to compete with Great Britain and France and Germany, whose in- dustry stands upon the firm and natural basis of free raw materi- als. This defect in our revenue system could be remedied by a joint resolution in one week, and the Conunittee on Ways and Means could then take as much time as might be needed to consider and adjust the infinite detail involved in the reconstruction of a tariff covering 2,500 articles. Unless a remedy be speedily applied the industry of this country will be surfeited by the excess of products for which it can find no market. There is a limit to the amount of food which we can sell abroad, and it is a great mistake to suppose that Europe cannot raise food in competition with America. The (question is not, as many seem to suppose, so much the relative cost of production, as the amount of rent which can be collected from the farmer in Europe, in addition to the cost of production. It is there- fore purely a question of rent. Foreign farms will not be abandoned, but the rents will be reduced and the products will be increased, so that, instead of larger, we are likely to have more restricted mar- kets. The process of readjustment is now going on. Kents have been reduced from 20 to 30 per cent., and if that is not sufficient they will be further reduced until land is as free in Europe as it'is upon this continent. Nations will not abandon the soil, but they will resist the imposition of rent and taxes which it will not bear. To any one studying the condition of this country at the present time three things are evident : first, that we are the most prosperous people in the world j and there I agree with the geutlemin from 8 Iowa; secondly, thai we are paying tlio highesi wagCH of auy peo- ple in the world ; and there again I agree with the gentleman n'om Iowa ; lastly, that we have the highest tarilF duties of any nation in the world ; and there I think I agree with the gentleman from Iowa. But he reasons post hoc propter hoc : because we have a high tariff, therefore wo are prosperous, and therefore we pay the h ighest wages of any nation in the world. But let me take him hack to that era of depression between 187^ and 1879 ; and let us diagnose the condition of things then. We had then an era of depression in which men went to and fro in this land begging for employment. Then we had the lowest rate of wages that has prevailed in this country for the last forty years ; and then we had the same high tariff that we have to-day. If I were to rea- son, as the gentleman from Indiana did, post hoc propter hoc, I should say that the high tariff caused the bad times, and the low wages, and the want of work. But the truth is that the tariff has nothing to do with the matter. I will not say " nothing to do ; " it has an influ- ence for evil, but it has no influence for good ; it cannot create good times ; it cannot create high wages ; it cannot give employment except in one single contingency, to which I shall recur hereafter ; and in that contingency it was powerless from 1875 to 1878 inclusive. The only logical conclusion from these facts which cannot be dis- puted is, that the depression then and the prosperity now, the low wages then and the high wages now, were not produced by the reve- nue system, in which no changes whatever have been made, but by causes which must be searched for elsewhere, and which must be un derstood before it will be possible for Congress to deal intelligently with the work of revenue reform, which public opinion requires it to undertake. Now, then, I take my first proposition, directly antagonizing the gentleman from Iowa. I assert that legislation cannot create value nor can it determine the rate of wages. The issue is fairly made up. There is no source of wealth in any country except that which is derived from the soil by the application of labor, machinery, and capital. It is not possible by any human contrivance, by any amount of abstract thought, by any schemes of legislation to add to the natural resources of any country. Whatever there may be, is in the soil and in the rain and sunshine that ftuctify it. Capital can only support the labor which is necessary to bring about the annual harvest, and machinery can only be used to economize the amount of labor be- stowed With labor and skill sufficient for the cultivation of the soil , the economy of production will be proportioned to the amount of caii- ital and machinery employed in its cultivation. There is no royal road to wealth — ^there is no patent process by which the resources of nature can be augmented. Can a man by taking thought add a cubit to his stature ? " In the absence of any legislation the work of production will proceed in a natural channel, and all that legislation can by any possiblity do will be to divert labor and capital from the direction which they would have taken under natural laws. I feel it neces- sary to make this statement, because many persons who have not given much reflection to this subject seem to think that there is some potency in legislation which can add value to the forces of nature. This fallacy underlies a groat many of the x^ropositions which are made in regard to money as well as industry. It is the key to the fiat-money delusion, and it is the explanation of the mistake which is made by those who advocate protection for the sake of pro- tection. When it is once tealized that value cannot be created by legislative action, and is tlie oiFspriug only of hard and honest labor aided by actual capital — that is, by the possession of accumulated wealth either in the form of money, structures, materials, or machin- ery— most of the difficulties in the way of intelligent legislation and of placing our industry upon a secure basis will disappear. But if legislation cannot create value, it can x)revent the growth of wealth by misdirecting industry into unprofitable channels, and by depriving us of the profit which is realized when we exchange the ])roducts of our labor, properly applied, for commodities which can be produced in other countries with less ex])enditure of labor than is necessary to produce these commodities at home. In other words the profits of legitimate commerce may be altogether or partially de- stroyed by artificial obstructions to the tree natural interchange of commodities. These obstructions constitute a deduction from the amount which our producers would otherwise receive for their labor and skill, and are therefore to be avoided, and not created by the action of government. From this simple statement it will be apparent that I do not be- lieve in the efficacy of taxation in any form as an aid to the devel- opment of industry. If we could dispense with taxation altogether it must be evident that the producers of this country would have more to spend and the consumers Avould get more for the money which tliey have to expend. As I have ah^eady stated, the only possible effect of taxes imposed upon foreign commodities must be to alter the di recti ou or distribution of human effort. To understand the bearing of this proposition we must go back to the origin of the Gov- ernment. In order to secure sufficient revenue, duties were placed upon imports, and those imports were selected upon which the duty could be most readily collected. The duty imposed added to the price of the article, and hence as this article was raised artificially in price, labor directed to its production would be better rewarded than 1 a bor devoted to the production of the untaxed article — assiuning always that the labor and capital in each case were not misapplied. In such cases the revenue duty necessarily becomes protective, the labor devoted to the production of the protected article being thus better paid. Thus there is a diversion from the unprotected channels of business into the protected channels, until an equilibrium is pro- duced between the wages paid in both divisions of production. WAGES FIXED BY FREE TRADE AKD NOT BY PROTECTION. The exchanges made between these divisions very soon adjust themselves upon a common standard of wages, so that labor and capital are equally rewarded, whether employed in the protected or the unprotected branches of business. This proposition is true of a country which has no surplus products to export, and in such a country the tax levied upon foreign imports distributes itself equally among the whole mass of the consumers. But whenever there is a great surplus of natural products to be exported the price of these pro- ducts is not made at home, but in the foreign markets where they are soM, and the wages which can be paid to the laborer engaged in the i>roduction of these articles, are therefore and thenceforth fixed and determined by what they produce in money, not at home, but in the foreign markets where they are sold. When the time comes that these products constitute the great bulk of the industry of the country, then it is clear that the wages which can be paid for labor is fixed abroad, and not at home ; in other words, by free trade and not by protection . This is our case at the present time. Wo 16 are seUing from se^en to eight Lnndred millions of dollarrt' worth of oiir food and other raw prodncts in Eiirox)e. Thewe j)roductH repre- sent the branch of bu8ines,s in which the largest number of our peo- ple are occnpied, namely, in the agricultural employments, wherein nearly 50 per cent, of our people are employed. Wages in this country are therefore not regulated by the tariflf, be- cause whatever wages can be earned by men engaged in the produc- tion of agricultural products, the price of which is iixed abroad, must be the rate of wages which will be paid substantially in every other branch of business. If other branches pay better, labor will quit agri- culture and take to manufacture; and, vice versa, if agriculture pays better manufactures will decline and agriculture will progress. Wages, like water, seek a level. Thus we dispose of the first j^eat fallacy of the protection system, which declares that a high tarifl pro- duces high wages. The wages of labor at any given time depend ufjou demand and supply. They will be high when our products are all wanted; they will be low when there is a surplus which the world will not take. Our great products are agriculture. In years of fam- ine the world will take all we have to spare ; in years of plenty there will be a surplus for which there is no foreign outlet. And in the ab- sence of markets for our manufactured products, we are reduced to the unnatural position of basing our prosperity upon the misfortunes of mankind ; when in fact the happiness and comfort of the human race ought to be proportioned to the abundance, and not the scarcity of the necessities of life. I have stated that the elfect of import duties is to divert enter- prise into the production of the articles upon which such duties are imposed, provided the natural conditions for their jjroduction are favorable. The development of the country accommodates itself to the situation thus created, and if circumstances or a mistaken policy lead to the imposition of other than revenue duties, then the articles so taxed will be produced in increasing quantities, until the market is supplied with the domestic product, and the foreign article is altogether excluded. A tax thus imposed for revenue at the outset, if sufficiently high, first becomes protective, and then becomes pro- hibitory in the natural course of events, and the whole industrial structure of the country accommodates itself to this condition of af- fairs. Interests of a vast and complicated nature are created, in- tertwining and interlacing with each other, so that any injury to one immediately reacts upon all the others. If by any possibility, as did occur in our case, the exigencies of war require the imposition of taxation on every conceivable form of value, and upon an unprecedented scale, then the interests created are so powerful, and reach into so many remote connections, that the work of reduction becomes not only exceedingly difficult, but very dangerous to the immediate welfare of society. The long era of depression to which I have adverted was, in my judgment, caused by the great waste of capital due to the war and to the false sys- tem of finance under which we carried on the struggle. High duties were absolutely essential to meet the interest w^on the public debt thus created, and when the reaction came, it was impossible to reduce these duties, without interfering disastrously with many branches of business, which were notwithstanding these high duties at times car- ried on at a loss, LACK OF KMPLOYMKNT. The greatest calamity that can befall a nation is that any con- si derable 'portion of its liiboi ing population should bo juable to get 11 work. That was the condition between 1873 and 1879. Any con- siderable reduction of duties at that time must have added to tho army of unemx)loyed laborers. In bad times tariff reform is not pos- sible; because of the suffering which is produced in special cases at a time when the demand for labor is slack. It is only in good times that we can attack the problem and hope to introduce reforms. But even then these reforms must be so made as not to cripple or inter- fere with any considerable existing interest. The object must be not to cripple, but rather to remove obstructions which interfere with the natural and healthy growth of business. We must therefore proceed slowly so as not to interfere with the oc- cupations of people, and not to dislocate industry to such an extent that men are compelled to seek new occupations by a sudden stoppage of those in which they are engaged. This has happened in Germany, where the new revenue system of a highly protective nature has posi tively destroyed many branches of business and reduced whole towns to a condition of destitution. In lowering the duties I would be careful to avoid these calamitous consequences, for, as I have said, there is no evil in a community equal to the lack of employment for those who desire work. Persons out of work not only become demor- alized, but they compete with others who are employed, reducing the standard of comfort and lowering the moral status of the entire com- munity. They are not only paupers themselves, but they breed pau- perism— a social disease so persistent when once permitted to get a foot- hold that no amount of moral quarantine is ever adequate to remove it. But, on the other hand, if reforms are not introduced we come upon another condition of affairs which is even worse than the one which we have described and desire to avoid. That condition of affairs springs from what is mistaken overproduction — that is, from the pro- duction of articles which the world wants but from whose markets we are excluded by an unnatural revenue system, shutting us up as if we were bounded by an impassable stone wall. This is the condition iii which we shall find ourselves whenever by good harvests abroad we shall no longer have a foreign market for the surplus products of our farms and our plantations. In the ordinary course of nature this condition cannot be far distant, and it is for that reason that I fear the delay which will be inevitable if action upon the tariff is to be postponed until we get the report of any commission, no matter how constituted. coJvmissioNS. Although the French commissions of inquiry on the tariff' simply delayed legislation for five years, and then bore no valuable fruits, against commissions I have no prejudice. In the English system of jurisprudence they do most excellent work, and they can be intro- duced with great advantage into many branches of our own admin- istration, where we are suffering from the lack of a compr^jhensive knowledge of the facts necessary to secure reform. When the Eaton bill was introduced two years ago, I was willing to accept it, because we were then at the outset of an-era of prosperity, which I felt surs would last long enough for the commission to report, and for legis- lative action to be taken. But now the time for a commission has passed by. The country cannot afford to wait for the results of its investigations. The business of the country is still prosperous, but the conditions on which its prosperity rests have greatly changed since the Eaton bill was passed by the Senate in the Forty-sixth Congress. Then we had begun to enjoy the fruits of a cojicurrence of favorable conditions such as have never existed before in the his- tory of this or any other country. 12 CAIJBES OF rROSPBEIXr. For six years, between 1873 and 1879, the *coun try had been econo- uiizing its resources and paying its debts. It was a period of tho Birictest economy, public and private, and of the accumulation of capital in the shape of convertible assets. The transfer of floating into fixed capital had practically ceased, and is sufficient to account for the want of an adequate demand for labor in the ordinary chan- nels of business. It was a period of incubation and of recuperation . The resources of the country had been overstrained and exhausted by the expenditures of the war, and by the delirium of an incontro- vertible paper currency, which produced an unnatural exhilaration .^u the industrial system. The reaction was necessarily severe. It did not and could not cease until the currency was i)iaced on the solid basis of convertibility into gold, the universal standard of value i n the world of commerce. This rsstoration of the currency of itself set free as money, and added to its available stock, all the accumu- lation of the precious metals in the Treasury, which before had been as dormant as if they were still locked up in the mines whence they had been extracted. It is the rapid circulation of money, and its availability for immediate use, rather than its mere existence which produce activity in business and inspire a healthy trade. The free- ing of $250,000,000 of coin, before denied an outlet into the channels of commerce would alone have been sufficient to restore confidence, and give new life to the energies of the people. But contemporaneous with the resumption of sjjecie payments, and preceding it for a sufficient time to make resumption possible, came the period of famine in Europe and of abundance in the United States, whereby the balance of trade, so long adverse, was turned in our favor, and from being a debtor nation we were enabled to pay olf all our floating obligations, largely to reduce our permanent debt to foreigners, and to draw from Europe a vast sum in actual specie : in 1879, $12,853,594 ; in 1880, $85,239,284 ) in 1881, $105,393,594 ; making a total of $203,481,472 up to the month of January, 1882, when ihe tide turned, and the outward current has set in. Besides this great addition to our reserves of specie we were able to retain the entire production of our gold and silver mines, amounting in the same period to over $200,000,000, making a total addition in three years to the bullion and coin reserves of the country of over $400,- 000,000, a sum which dwarfs the treasures of "Ormus or of Ind," recalling the tide of wealth which after the discovery of America served, through Spanish channels, to revolutionize the whole face of European commerce. Besides such causes as these, with the effect of which economists wei e familiar and could predict, there was another element iu regard to which no previous experience existed, and which added to the net profits of our foreign trade an amount which has not been cstiinateil, and which but few persons api)reciate. I refer to the cheapening ol' t ransportation caused by the substitution of steel for iron rails, and the general introduction of screw propellers and compound engines i nto ocean steamers. The economy of these improvements have i nured to the benefit of the United States chiefly, and the reduction in cost has been added to the profits of the producers upon this sixde of tho ocean, wliilo they have not been of corresponding advantage to tliG conutri<'S who compete with us for supplying the nuinufacturing nations of Europe witli food. The cunentprice of grain, like that of other |)rod»i(;ts, depends upon the demand andsupply from day tod;)y,and Ironi week to week, but the 13 underlying and. pre-existing conditions of production determine the average price at which grain may be permanently and regularly sup- plied. In Great Britain, which affords the great markot for our food produets, the cost of production is increased h.y n> system of rents which must be added to the natural cost of |>ri>duotion. Our great competitors for supplying the English marker;s with grain are yet without any considerable raikoad system, lacks the best tools of pro- duction, such as plows, reapers, and thrashing-machines, and have no elevators for handling grain at the ijorts of shi}unent. Such were in brief the conditionsofcomx)etitionw;heu our railroad system, steadily growing and expanding, reached the greatest and most fertile portions of the wheat-growing regions of the valleys of the Mississippi, the Missouri, the Saskatchewan Rivers and their tributaries. The introduction of steel rails, the cost of x)roducing which had, by invention and experience, been reduced to an equal- ity with iron rails, so rapidly brought down the expense of trans- portation, that within ten years the charges of carrying grain have been reduced from 1.59 cents to .3945 cents per ton per mile dur- ing the recent railroad war. In the same manner the cost of ocean freights have been reduced from 10.56 pence in 1873 to 4.13 pence in 1881 for a bushel estimated to weigh 60 pounds. The whole of this reduction in the cost of transportation from the farms of the West to the grain markets of Europe has gone into the x)ockets of the pro- ducers and has been added to the wealth of the United States, and this has happened because the unusual scarcity of food in Europe has afforded an adequate market for our entire surplus. I estimate that the sum thus added to our national wealth in three years amounts to a sum larger, including the saving on domestic consumption, than the whole value of the food products which we have exported to foreign countries. To Sir Henry Bessemer chiefly, and to our lately deceased country- man, Alexander Lj'^man HoUey, who perfected Bessemer's invention, do we owe these vast results, which are rapidly changing the face of society, undermining the strongholds of privilege and monopoly, and Avill ultimately transfer the primacy of industry from the European to the American continent, unless we obstruct the course of nature by artificial impediments and unwise legislation. The result of this great invention is already to be seen and felt in the land movement in Ireland, Scotland, and England, certain to end in the downfall of the aristocratic system, and the transfer of the land on equitable conditions to the actual cultivators of the soil. When this is accomplished the margin of profit now realized from sup- plying Europe with food will be reduced, and for this curtailment of ]>rotit we must prepare by making the conditions and cost of i)roduc- tionmore favorable than they are now. In other words, every obstruc- tion to the cheap production of food from unnecessary taxes, either n;itionalormunicii)al, must be removed, and every possible element of economy must be introduced. But the pressure from this direc- lion is not yet felt, and will not be felt until abundant harvests in Europe shall reduce the average price of grain. Now, the result of the cessation of the era of dex^ression, stagna- tion, rest, and recuxDcration which foUoAved the panic of 1873, and of the revival of business due to the substitution of good money for bad money — of the fortunate concurrence of unlimited markets for our food products, Avith the cheai^euing of transportation due to the a|;^lication of new and most beneficent iuA^entions, of Avhichwe are able to appropriate the first and best fi-uits, has been to reopen the 14 olia/imelsorLmmigiatiou wliicb licii(l))oojj c1usiness. The increase in popu- lation alone amounts to 30 per cent., but this increase gives but little idea of the growth of wealth during the decade which has just closed. When the census figures are available it will be found that we have made vast strides in the accumulation of capital, in the capacity for production, and in the development of the fundamental conditions upon which we may hope to enter into the great markets of the world with the products of our genius and industry ajjplied to the forces of nature. It is estimate^ by the best authorities that the wealth of the world increases, at the present time, at the rate of |10, 000,000 per day, to which the United States contribute from one-quarter to one-third, and therefore grow richer at the rate of $2,500,000 with each revolu- tion of the sun ; but this increase, amounting to $1,000,000,000 an- nually, depends upon our having full emx)loyment for our labor in channels where it is usefully bestowed. HOW TO INSURE PKOSJPEKITIT. 1 have entered into this exhaustive, and possibly exhausting analysis of the causes which have produced the improved and satis- factory condition of business, in order to demonstrate my second proposition, which is, that the existing tariff has been as poiverless to pro- dace the prosperity we now evjoij as it ivas to prevent the depression of busi- ness from which, happily, we emenjed in 1879, which it then served to aggravate Ijy denying us access to foreign markets for our manu- factured products. In spite of the tariff, and not because of it, we alone of all the nations of the world can be said to be in a pros- perous condition. To insure the continuance of this prosperity is the first and highest duty of statesmanship. If it can be made permanent by sitting still, by refraining from legislation, then Con- gross should not meddle with our revenue system, no matter what may be our precon<;ei ved notions on vexed economic questions, whether we 1)e the (Ir votc-cs <>l" fr('<(!i trade or the advocates of protec- tion. When things ;u'o well ;uid likely to continue well qiiieta noii wovero is the safest rul(5 of etatcsjuanship. But if we can detect the 15 clonds wliicli precede the storm in the industrial worhl, then it is our duty to provide against the coming dangers and to avert, as far as we can, its disastrous consequences from the firesides of those who have sent us here to protect the present and provide for the future wel- fare of the people. If it were done, wlien 'tis doue, then 'twere well It were done quickly. Let us then see how far the causes of our i)resent prosperity are con- tinuing causes — liow far they are permanent, and how far they are transitory. In considering this question let me say that the great natural resources upon which the prosperity of the country is founded cannot in our day be exhausted or sensibly impaired. We have in fact but explored tlie outcrop of the treasures with which our com- mon country is endowed. There will be a population of 200,000,000 before there can be any pressure for room, or upon the means of sub - sistence, provided perfect freedom for development and for the inter- change of commodities is secured, and access for our products is not denied to the open markets of the world. We may also assume that the free Government under which we have grown with such marvelous strides and which is so admirably adapted to full continental development, will be preserved by the people, who comprehend that civil liberty is the corner-stone upon which individual enterprise and personal prosperity are founded. We may conclude that the benefits of a sound currency are now so fully understood that nothing short of the exigencies of a great civil conflict, ax)parently and happily now impossible, will ever be permitted to disturb or banish the metallic money of the Constitu- tion and of the fathers. But we shall not again experience the stim- ulus which was given to confidence and enterprise by the resumption * of specie payments. That work is done, and, as I hope, with the coming decision of the Supreme Court in regard to legal-tender issues, will never have to be encountered again. The benefit of a sound currency will be a continuing one, but the stimulus of its recovery is exhausted and cannot be renewed. So in like manner we shall never again, in all human probability, feel the sudden and incalculable benefit of a great reduction in the cost of transportation. It is inconceivable that another Bessemer invention can in our day be made and perfected. If ever there is to be another benefaction in this direction, it must come from the superseding of railroads by some other or better mode of transporta- tion, in the air or in the water, or by some improvement in motive power through the gate which has of late been opened by the pro- gress of electrical science. But so far as human judgment can pre- dict the cost of railroad transportation reached its minimum during the recent war of the trunk lines. What cause then remains to insure to us a continuance of our pros- perity ? Only the access which we have to the foreign markets of the world for our raw products. What are the facts in regard to these markets, and the prospect of their continuing to absorb not only the quantity heretofore taken, but the increasing surplus which we get from the steadily increasing acreage brought into cultivation. For three years past we have been relieved from the necessity of ask- ing or considering this question, but to-day it presses upon us for solu- tion. Already the change has commenced. The official returns from the year 1881 are now available, and cast an electric light upon the dangers of our present condition. The change is positively start- ling, and must arrest attention of every thoughtful student of pub- lic affairs. 10 TFIK SITUATION. the oxporfcH of 1880 were $-:!7r),5Bi,075 ; the exports of 1881 were $814,161,573, Hliowin*; ii decrease of $(> 1, 402, 502. This decrease of it- self would be most suj^gestive of serious charijres iu our commercial position, but when it is fouml that the whole of this enormous de- crease has taken place during the last four mouths of the year and is therefore going on at the rate of .$180,000,000 p(ir annum," we can- not shut our eyes to the peril of the situation. While the exports have thus decreased the imports have increased iu the last live months of the year $32,000,000, or at the rate of nearly $80,000,000 per annum. If the same proportions should continue during the year 1882 — and so far as the month of January is con- cerned it has continued — the change will amount to over $250,000,000 iu our international balance-sheet. The balance in our favor in the fiscal year 1881, amounting to the enormous sum of $259,712,718, Avould thus be totally extinguished, and we should be compelled to disgorge the treasures of gold and silver, of stocks and bonds, which we have accumulated during the past three years of plenty with us and famine with our customers. What will be the actual result I do not pretend to predict, but the shipments of gold have already commenced the stock exchanges of the country are deeply disturbed and values have seriously fallen, mer- cantile failures are increasing, and confidence is impaired, so that a halt has already been called upon enterprises of a speculative charac- ter, while others, based upon sound principles, are compelled to move with great caution. The situation, if not alarming, is very serious. If there is not likely to be a sufficient outlet abroad for our surplus pro- ducts they must be consumed at home or perish in storehouses and granaries. We can all recollect such periods in our history and know what depression, distress, and general disaster such a surplus of prod- ucts not needed for consumption is sure to entail; our very abun- dance becomes the source of our misery. This brings me to my third j)roposition, which is, that access to the open markets of the world for our inaimfactnred "products is essential to the continuance of our prosperitii. STEPS TO BE TAKEN. If WO Qo.wVX consuBie our surplus food in the production of manufac- tured articles which eoukl find an outlet in the open markets of the world, which we could sell in competition with other nations, who are not irnpeded by chai ges ui)on raw materials, we could at least, if no longer able to draw into our coffers the accumulations of gold and silver with which our industry has been fructified — we could ^t least find occupation for our working population, and gradually establish our industries u])on so broad a basis that the failure or superabun- dance of a single harvest would not affect their general stability. It is true that we cannot hope to provide remedial measures which will produce immediate results, but any improvement in the conditions for produ(;tion by which our markets may be widened will moderate the iini)endiug calamity and shorten its duration. Any delay in re- juovliig tlicsc, ol)strnctions is not only dangerous, but positively crim- inal. Congress will be held to a strict account for its sins of omission as well SIS of commission. So far as we have the knowledge and ex- I)erience, we are bound to apply it at once to the x^robleni which is upon us and dcnuinds solution. If there be things which require investigation before action, lot them by all means be investigated; Ijiit while we are waiting for the results of this investigation neither public opinion nor our own conscience will justify us in postponing It tiie consideration of tlie reforms for whicli tlie knowledge exists, the facts are accumulated, and the need is urgent. What steps can then be taken in order to relieve the force of the calamity which will result from being cut off from the abundant mar- kets Avhich we have had for our surplus products during the last tliree years ? Happily in considering the situation we are relieved from all the necessity of deciding the vexed question of free trade or protection. That question, important as it is, is not now involved in the work before us. I have already pointed out that interests have grown np under the existing tariff, which has lasted for twenty years, of such a vast and complicated nrture, and employing such a large propor- tion of our pojmlatian that any interference which would tend to dislocate this industry, that would be likely to impair its efficiency and not advance the substantial elements of its prosperity, growth, and increase, would not only be an act of folly, but would produce results so disastrous to the whole community that no party or set of men who might undertake it would be sustained by the popular approval, but would be consigned to oblivion at least for a genera- tion. I have already pointed out the direction in which the reforms may be imdertaken, and the obstructions to the development and growth of our industry interposed by the tariff' may be removed, not only without injury to any existing interest, but to its positive beneht. BENEFICENT EFFECT OP REDUCING TAXATION. The existing tariff' was enacted as a war measure, intended to raise revenue at any cost. It succeeded in its purpose. To-day it pro- duces 1150,000,000 annually more than is needed for the national expenditure. To that extent it imposes an unnecessary burden upon The productive energies of the people. It is a tax upon consumption and is substantially a per capita tax, and therefore presses with peculiar severity upon the working classes. If this surplus tax were not collected there would be just so much more left in the pockets of those who pay it. Stated in its simplest form, it is an unnecessary tax of $3 \)er head upon each inhabitant of the country. Assuming that each workman supports five persons, including himself, he is paying an unnecessary tax of $15 a year. If this tax were removed he would either have $15 more in cash to expend, which would in- crease the general volume of business and the demand for labor, or he could afford, in case of close competition, to take $15 less wages, which would cheapen the cost of new products and enable ne^^- mar- kets to be secured. Obviously, then, it is the immediate duty of Congress to remove this excessive tax, in order that either the remu- neration of labor may be enhanced, or the market for it enlarged, at the time when it is threatened with restricted markets abroad for its products, and restricted employment at home. Nor can this duty be postponed or delayed without aggravating the distress which must inevitably fall upon the working classes, when the demand for labor is narrowed by any cause whatever. And here let me say, that Congress, in giving attention to what the best interests of the work- men of the country demand, will best serve the interests of capital which, so long as it has the protection of law common to all pro- perty, needs no special protection, and least of all protection at the expense of the normal remuneration of labor. In reforming the tariff' I would select first the raw materials of industry and waste products as projier subjects to be transferred to the free list. This change will lead at once to the extension of many 2 HE. 18 brancliOH of T)usincR.s and tlio OHtaljlislimcnt of many now avonuort for labor. No injury will be doiio to any (sxiHting interest, Wecaune on tliose raw products the freiglit isalwayn sufficient to compensate for tlie difference of the rate of wages i)revailing in this country, and in the countries from which these products are imported. Many of these raw materials are needed for mixing with our own materials, and indeed many branches of industry cannot be successfully con- ducted without such admixture. Every j>ound of foreign material thus imported will enable an additional quantity of our own mate- rials to be used, and in this way the market for these materials and the area for the employment of labor will be greatly and steadily enlarged. The abolition of the duty on raw materials will then enable us to make a corresponding reduction in the duties imposed on the manufactured products of which they are a com])onent part. This reduction of duty on the manufactured product will lead to lower prices, which in their turn will produce a larger consumption, whereby the area of emxjloyment will again be enlarged. Notably in this class of reduction will be placed the manufactures of cotton, wool, iron, steel, and many chemical products. This will relieve us from the necessity for raising duties in any case, as was proposed in what is known as the McKinley bill. In the rearrangement of the tariff npon this basis, I shall be able to jiroduce the testimony of tho most Intelligent manufacturers engaged in these great branches of industry, that the result will be benelicial and not injurious. The CHAIRMAN. The time of the gentleman from New York has expired. Mr. McKINLEY. I move the time of the gentleman from New York be extended indefinitely. The CHAIRMAN. The Chair hears no objection, and it is ordered accordingly. Mr. HEWITT, of New York. I am much obliged to the gentleman from Ohio and of the House for their courtesy. PROTECTIVE DUTIES. The argument for protective duties is based entirely upon the differ- ence which exists between the compensation for labor paid in this country and in the countries with which we compete. I have ali'eady shown that this difference is not due to i)rotective duties and can- not be affected by them, but arises from the great natural advant- ages which the labor of this country enjoys and from the absence of vast standing armies, which elsewhere consume the substance of the people. But the difference in wages does exist, aud there are branches of industry which cannot be carried on without an equivalent compen- sation in the form of protective duties, or of a bounty from the public treasury. Whether it would have been better originally that these branches of industry should never have recei ved any artificial stimu- lus, is a question which it is not necessary now to discuss. They do exist as the result of a revenue system, which is the growth of a Inmdred years, and I do not think that there is anywhere tlie wish, if there l)e anywhere the power, to strike these industries down, I acknowledge, therefore, and I assert, that at this late d;i>' i I is not pos- sible, nor politic, to reorganize our general business upon any other basis, than that which re(;ogni/es, and so long as possible perpctnates, the difference whicb exists in the rate of wages, because even if the purchasing ])0we-r of our wages were no greater than those which are paid l)y our comp(!)tit.or, we ma ke a very great ga^n when wo exchange prodn<;ts produced ata high rate oi'wa,gea, with nations where a lower rate of wag<'S prevails. J C we s(di our labor abroad at |1 per day and 19 parcliase the products of foreign labor equally efficient at lifty cents per day, we get the fruits of "two days' labor in exchange for one. Hence, it is our interest not to cut off and restrict foreign trade, but to give it the largest expansion which, is i)Ossible without reducing the rate of wages i)aid in this country. It is thus that foreign commerce is proiitable ; not by the interposi- tion of obstructive charges, as my colleague from New York [Mr. His- COCK] seemed to suppose in his recent remarks, but by the removal of all impediments in the way of the Interchange of commodities which are produced with less labor in our country, than in the other with which it exchanges. As long, then, as the higher rate of wages may be maintained lu this country, and as long as we desire to preserve those branches of business wherein the higher rate makes it impossible for us to com- pete on even terms with other nations, we must so arrange the tarifi' that in these branches, there is a rate of duty established which will compensate for the difference of the cost of labor in eacli. In order to do this we must determine, first, what is the actual difference in the rate of wages, and, secondly, how the duty shall be applied in each case in order to compensate for this difference. I shall not have time to go into details as to the difference in the rate of wages, but I will append to these remarks the tables which were constructed in the State Department in 1879, giving the differ- ent rates of wages, and the cost of food, in the different countries of the world in the year 1878, when wages were lowest not only in this country, but in all countries. It will be sufficient for me now to say, ( hat as between Great Britain and the United States, the rate of wages is on the average about 50 per cent, higher here than there. It is true that skilled labor is much more highly paid in the United States than in Great Britain, while the difference in common labor is not so great as I have stated ; but the tendency of modern industry is to in- troduce machinery by which the amount of skilled labor employed is steadily reduced. This is strikingly illustrated in the manufacture of Bessemer steel, where, although the profits have been uj)on a scale of unprecedented magnitude, the wages paid for common labor in Pennsylvania ($1.17 per head) is precisely the same as the wages paid for the same class of labor in iron-works, while the wages for skilled labor in the Bessemer steel- works is very much less than the wages paid for skilled labor in iron-works, being |2.46 per day in the former and |3.03 per day in the latter. Mr. RUSSELL. Is that on account of skill ? Mr. HEWITT, of New York. No ; because by the machinery of the Bessemer steel works another set of faculties in the human con- stitution is called into exercise. It is rather in the eye you want skill there than in the manix)ulation, while in the iron works it is rather the skilled hand than the skilled eye. INDUSTRIKS DEPENDENT ON PKOTEGTION. The branches of business which are dependent upon the tariff are chiefly the manufactures of cotton, wool, flax, iron and steel, pot- tery and silk. They employ a large number of operatives, although by no means so large a ratio, of the population as is generally sup- posed, probably not exceeding 7^ per cent. If the works engaged in these manufactures were stopped, the persons employed would doubt- ' less be absorbed in other branches of business without affecting materially the wages of labor. We have in fact absorbed in the las t 20 three years a Ibreign iminigrriiion liir hirgoi- lhan all ih(i i)0[mlafcion (LepeDfliag upon tlic jnauufacture of iron and steel, and we hav<» tariff for revenue only" are in effect identical, and are converti- ble phrases. This proposition is, however, only true of specific and not of ad valorem duties. If the duty rises with the price, the con- sumer is cut off from the protection of fair competition, while the producer gets the benefit, of a high duty when he does not need it, and finds the duty fall to an unprotecting point when he does need it. If, therefore, the normal rate of duty be 35 -pex cent., or what- ever it may be, it should be applied to the average price of the com- modity, and the specific amount thus arrived at should be the rate of duty adopted in any proposed tariff. Mr. UPDEGRAFF, of Ohio. What does the gentleman mean by needed x^rotection of industries ? Mr. HEWITT, of New York. They would receive all necessary protection. Mr. UPDEGRAFF, of Ohio. Will the gentleman allow me to ask him what he means by necessary protection, as he claims that no pro- tection is necessary ? Mr. HEWITT, of New York. If the gentleman will recall what I have already said he will see that I enumerated several branches of business in this country which could not exist in competition with foreign countries unless the difterence in the rate of wages was com- ])ensated by countervailing duties, and that is what I mean by needed protection. MONOPOLIES TO BE AVOmED. I have thus established my fourth proposition which is that a iarifi designed to produce an adequate revenne on tlie av€fi~age of years loill give all the pvotection which American industry needs ; and in fact I think I have shown that the true revenue duty coincides with, and affords the protection which, on any reasonable theory of equivalents, can be de- manded for American industry, and I have given a rule easy to be ap- plied for formulating the rates required for this purpose. Any other method of procedure has, and would have, only the effect to build up special interests at the expense of the general good, and to i)roduce anomalies which are at war not only with the fundamental princi- j)les of economic science, but with the welfare of the community. The manufacture of steel rails affords an example of this violation of sound principle. The duty which was once a reasonable appl i- cation of the ad valorem principle has become in the course of time, by the progress ot invention and experience, oppressive and prohibi- tory, and has produced some results so rema i-kable that they should be recorded as a warning. Last year the production of steel rails in this country was in round numbers a million of tons. Inasmuch as the demand exceeded the 22 supply tlio whole, or iieMdy Uio whole duly, ton,) wan added to the price. I think I am juBtilicd id saying from my knowledge of the buHineHS, that tiie prolity of last year were between tiitoen and twenty millions of dollars, on an original in vestment of not more than the same amount. Now, if this vast i)roht had been divided between the owners of the works and the labor employed in operat- ing them, the(5ommnnity at large, although still i)ayiug an extrava- gant price for the steel rails which they require, might perhaps look with some complacency upon the exactions to which they have been subjected by the operation of the law; but the inexorable rule that wages are determined by demand and sapply, applies itself to the manufacture of steel rails with the same certainty that it ©iterates in other branches of business. According to the census returns the workmen employed in the Bessemer steel works in 1880 were 10,835 m number, and were paid $4,930,340, being at the rate of $460 per head, while in the iron works 80,133 workmen received $34,047,099, being at the rate of about $450 per head. As a matter of fact, I presume they were paid at ex- actly the same rate on the average. But there was this remarkable difference between the two branches of business : In the steel works $5,000,000 paid out in wages produced a proht of from fifteen to twenty millions of dollars to the proprietors, while in the iron works |5, 000, 000 paid out in wa^es did no t produce more than $1 ,000, 000 proti t to the owners. At least in my own experience the profits in the man- ufacture of iron do not exceed on the average of years 20 yer cent, of the amount paid out in wages, and 1880 was an average and not an excei)tional year. The operation of the tariff therefore, so far as steel rails are concerned, is not to benefit the working classes, who are not paid at any higher rate than they would be x)aid in any other branch of business, but to take from the community at large at least fifteen times, if not twenty times, as much profit as the general average business of the country will warrant. It is thus that the rich grow richer and the poor poorer, and it is facts such as these that call upon us in solemn tones and without delay to remove from the statute- book all legislation which tends to aggravate the inequalities of for- tune. COMMISSION UNNECESSARY. The principles I have laid down can be applied without the aid of any commission. As I have already said, the information is al- ready in the possession of the Committee on Ways and Means, or within the knowledge of members of this House. If the committee is disinclined to undertake the task of applying these principles, then let the Representatives in Congress asseml)led undertake it and constitute special committees for the work. Tiiere is no leading branch of business which is not represented in this House. Mem- bers here know what measures of reduction van be ]»ormitted and what raw materials can bo admitted free. To this work of reform l)oth x)arties are committed. President Arthur in his letter of ac- ceptance used the following language : Such cliiiTif^es sliould be mado in the present Lat iff HyHfjOui of taxation as "will relievo every buinhinod industry and enable our artisans and inauufacturors to compete auccessrully with tliose of other lands. On the other hand the Democrats, when they planted themselves 23 n^oD a tariff for revenue ouly, declared througli tlieir leading met, and by ever authority whose utterances are worth considering, that their only intention was to remove the obstructions to the growth of industry by making raw materials free and by establishing a rate of duty which would be just as between the producer and the consumer, protecting each at the time when each needed protection . Mr. RUSSELL. Is the gentleman in favor of the abolition of the duty on wool ? Mr. HEWITT, of New York. I am absolutely in favor of the abo- lition of the duty on wool, and I am confirmed in this view by the opinion of the largest wool manufacturer in the United States. If the wool-growers have removed from them the burdens of the extra price they pay on every thing they consume they will receive ample indemnity for any sacrifice they may make in the reduction of the duty on wool. CONSEQUKNCES OF DELAY. My fifth proposition is, that if uie shall fail to deal with this qitesiion now and at once, it is inevitable that we shall soon relegated to the con- dition of sufferinq in which we found ourselves during the trying era hetween 1873 and 1879. During that j)eriod of suffering we had all the benefit which a protective tariff can offer, for the tariff we have now was the tariff" we had then, and yet business was never so bad, employ- ment never so hard to get, and wages were never at a lower ebb. This fact is suflicient demonstration that the tariff does not, and cannot, control the rate of wages, or provide an avenue for labor, except in the one contingency when foreigners seek to make a mar- ket for their sm'plus products in a period of general stagnation, and for this contingency a tariff designed for revenue on the average of years, as I have already shown, fully provides. What troubled us in that sad time of de]3ression was the fact that, weighted as we were with duties upon the materials which lie at the basis of industry, we could not get access to the general markets of the world for our prod- ucts. When such a period returns, as return it will, we shall encounter precisely the same difficulty, but it will be aggravated beyond any past experience by the great increase in the capacity for production which we have been making during the last four years. Mr. KELLEY. Could England find a market for her products during the era to which the gentleman refers ? Mr. HEWITT, of New York. It could not. Mr. KELLEY. Then it was not protective duties which shut our commodities out of other markets ? But was it not the inability of the people to consume? And further, did that not come from a financial cause, namely, the suppression by Germany of the great part of her pax^er — of bank notes under lji25, or £5 sterling, the abro- gation of the use of silver by Germany, the steady application of our surplus revenue to the contraction of our greenbacks?" I am not going into a discussion of what is money, but to assert that green- backs performed the functions of monev. Mr. HEWITT, of New York. But I am afraid the gentleman is. Mr. KELLEY. They were then performing the service of money, but the demonetization of silver by this Government through the withdrawal of the medium of exchange from the world by these two governments, did it not paralyze industry the consumptive capacity 24 of tiie wlioie world ? No tariff can con trol wiicli continfrcncicH. [ Ap- ])laiise.] M r. 1 1 E WITT, of New York. I wi 1 1 aiiHWcr the ^^entleman by Hay- iii<4' tli;i,t liifs long- ((nestion m a conundrnm proper to be addressed to the Jiepublican piirty. They framed all this hjgislation. Mr. KELLEY. Oh, no ; they did not frame tlie German leg-isla- tion. Mr. HEWITT, of New Yoik. T did not interrupt the j^eiitlenian, hilt let him l);i,v(5 his own time. They framed all the thiaiicial legm- latioii of this country. They (;reated this system of taxation which I tliink one of the worst ever constructed, and which (;ontri Imted more than anything else to bring on the fimuicial depression to which he refers. When we got hack to the solid Democratic ground of hard money then we got hack to j)rosperity. 1 answer the gentleman, therefore, in this wise: If he is, like Martha of old, troubled about the many things he has pointed out to me, I ask tliat he go over to his own side and settle it with his own people. [Laughter and ap- plause. ] Mr. KEILLEY. I should like the gentleman to answer whether T did not name the causes. Mr. HEWITT, of New l''ork. You named a great many causes, Init I find the gentleman generally omits the right cause, which is in this case a high prohibitory and destructive and obstructive tariff, [Applause.] Mr. KELLEY. I refer to that period, and ask the gentleman whether I attribute to the right causes, to the coincident demoneti- zation of silver by the United States ? Mr. HEWITT, of New York. I have heard the whole catalogue. Mr. KELLEY. To the contraction of money by those two govern- ments? Mr. HEWITT, of New York. I answer the gentleman that many things enter into good times and bad times, that this is a very big world, that its condition at any one time is the resultant not spVing- iug from one nation but from all nations. All nationa contributed to the jieriod of depression to which the gentleman referred, each in its own way, and we contributed most seriously by our obstructive taritf, whicli refused to allow our people to exchange their products which they would have been glad to sell for the products of other nations, which these nations were able to produce at a less cost than we were aljle to produce the same articles. Next to the destructions caused by the civil war that was the chief cause of that long period of depression. [Applause.] Mr. KELLEY. Had Germany or England a prohibitory or de- structive taritf at that time, and did not both suffer in common with us? Mr. HEWITT, of New York. They suffered from our inability to eonsume, and our inability to consume was the result of a bad finan- cial system (;oupled with our obstructive tariff. [Applause.] Mr. liRlTMM. Will the gentleman now i^irmit me to ask him a (juesticm? Mr. HEWri^r, of New York. Certainly. The House has kindly ex((Mii'i- macy of induHtry will bo transferred, gradually hut steadily from the Old World to the Now, and free trade will give uh the marketH of the Avorld which are now controlled hy the mother country, and this without impairing our ability to X)ay the higher rat(; of wagCH due to cheaper food, lower taxes, and greater personal intelligence in work. LYON rT.AYFAUt. That this anticipation i,s not illusory, let me adduce the testimony of Dr. Lyon Flayfair, the deputy speaker of the House of Commons, and one of the highest living authorities in the laws of industrial ]>rogre8s. I quote from the February number of Macmillau's Maga- zine, in which he sums up the results of his observations on our in- dustries during his recent visit to the United States. He says : No one expects a .speedy l ecognition of tlie advantages of free trade, nor is it to be desired. When a man has been walking on cratches they must not suddenly be pulled away from him. England does not sutler so much from tlie protective policy of the United States as" she believes. The protective duties ot America remove from lis the most formidable competitor in the markets of tho Avorld by raising its prices of production. They protect England in all neutral markets, and enable us to send even into the United States £2.'),000,000 of maiuifactnrecl goods, while they return to us less than £3,000,000. It is impossible not to fore- see tliat the United States will, in the end, be the great manufacturing country of tlie world ; but they cannot assume this position under their present hscal policy, and the final consummation will, in any case, be immensely retarded by the enil- h'.ss evils, which spread like weeds over a country where si iirotective policy has long prevailed. It is these weeds which, by judicious steps of reform, slowly but intelligently pursued, I hope to eradicate, and some of these steps, the safe and sure steps, I want to take without any delay whatever. CONCLUSION. But let us reverse the picture, and see what is likely to happen in case we delay the reforms in the tariff, which are demanded by both politi- cal parties, and by every consideration of public interest. If good har- vests should be secured abroad we shall have a great surplus of food upon our hands and the price will fall ; wages will go down with the fall in price; the reduction of wages will be resisted by strikes and lockouts ; the conflicts between capital and labor will be reopened, and indeed have already begun; the prosperity of the country will be arrested; railroad transj)ortation will fall off; new railroads will cease to be constructed; our shops will lack work; there will be a deartli of employment all over the country; the volume of immigration will fall off, and the career of expansion and general development will be brought to a disastrous conclusion ; the sad experience of 1873-79 will be repeated until through the gate of suffering, poverty, and want, we shall establish a lower rate of wages and the products of the country, weighted as they are with obstructive taxes, which must be deducted from the wages of labor, will force their way into the open markets of the world in spite of the tariff. We shall then reach the era of free trade, but on conditions which will deprive this gener- ation of workmen of all the bonelits which they would have derived from it, if tho way had l)een properly prepared for its final triumph. The result cannot l>e arrested, but witli wise stat<'sinanshii> the transi- tion may be made, not only without disastei' or snffiM ing, but with 29 positive benefit to tlie general welfare, Witli a failure, however, to comprehend the situation it will come throufjh convulsions and revo- lutions, from the suffering and horrors of which I i)refer to turn away in silence. But there is one aspect of the case to which I cannot shut my eyes. The whole structure and genius of our Government must be changed in order to meet the ])rimary necessity which will thus arise for preserving social order. With the general occurrence of strikes and lockouts will come, as in the case of the railroad riots in 1877, the demand upon the Federal Government for the presence of its troops to maintain order and put down violence and mobs; force will be met with force ; a larger standing army will be de- manded by public opinion and conceded by Congress ; the power and rights of the States will be subordinated to the superior vigor and resources of the national Government; the duties of governors will be juerged into the prerogative of the President. With a large stand- ing army acting as a national police, under the directions of an ex- ecutive whose authority will thus be as omnipotent as his troops will be omnipresent the era of free government will have passed away, and the reign of despotism will have commenced. The sacred privileges of indiv^idual citizens will be lost in the general demand for a strong government, and all thiit freedom has gained by the heroic struggles of our forefathers for a thousand years, and by our resistance to tyranny for three centuries in the New World, will l)e [uit in peril. Such a calamnity ought never to come to pass, and it never will come unless this generation of men and the representatives of this generation upon this floor fail to comprehend the spirit and The warnings of the time; when capital and labor, mobilized by the